Rocket Mortgage Review: Best In Class Online Lender
Shopping for a mortgage usually entails going to lender offices and taking the time to speak to their staff for a loan offer. Not only is this time-consuming, but you also may not have the time to do it in the first place due to your other activities. To improve the convenience of their customers, Quicken Loans created Rocket Mortgage, a lender that offers customers a way to take care of all their home loan needs online.
In this Rocket Mortgage review, we go in-depth on how this fully-online loan processing benefits borrowers. We also examine how Rocket performs in the five main criteria of a good mortgage lender, as well as go over their strengths and weaknesses.
How We Review Mortgage Lenders
So we can examine how well Rocket Mortgage performs, first we need to define how we review them. In this section, we break down the five criteria that we use to measure Rocket Mortgage’s performance.
Mortgage Product Availability
The first thing we examine is the mortgage lender’s suite of loan products. To understand what types of mortgages are usually offered by lenders, we break down the five major loan types.
Conventional Fixed-Rate Mortgage
Fixed-rate mortgages are the most common type of conventional loan. If a borrower takes this loan, they receive fixed interest and APR that won’t be influenced by the market. Because the APR doesn't change, your monthly payment will always stay the same.
Due to the predictable APR, these mortgages are especially popular with long-term financial planners. To qualify for this loan, you typically need a credit score of 620.
Conventional Adjustable-Rate Mortgage
In contrast to a fixed-rate mortgage, adjustable-rate mortgages (ARMs) have shifting interest and APR that adjusts annually – meaning your monthly payment value will be unpredictable. The adjustments are based on a market index chosen by the lender.
An ARM usually features fixed interest rates and APR at the start of the loan before it enters the adjustable phase. This period of fixed mortgage rates is usually denoted in the name – for example, a 5/1 ARM means that the fixed-rate period lasts five years. Similar to a fixed mortgage, you also need a minimum credit score of 620 to qualify.
Jumbo Mortgage
The value of conventional loans is limited by the Federal Housing Finance Agency (FHFA). If you want to buy a property valued above this loan amount limit, you need to take out a jumbo loan. Jumbos are offered by lenders in fixed and adjustable terms. You also need a higher debt-to-income ratio to qualify.
Because lenders bear more risk on a jumbo mortgage, they typically have a larger minimum credit score and down payment requirements. You also need to pay a larger monthly payment amount due to the larger value.
Government-Backed Mortgages
The United States federal government issues home loans to help people from certain demographics become homeowners. Because they are insured by the government, a government loan usually features more relaxed qualification requirements, allowing people with lower credit scores to qualify easier.
The three most common government mortgage types are:
- VA loan: This loan administered by the Department for Veterans Affairs is aimed at active and former military personnel. VA loans feature no down payment and a lower minimum credit score requirement.
- FHA loan: Aimed at low-to-middle income homebuyers, this Federal Housing Administration-sponsored loan boasts lower credit score requirements and only requires a 3% down payment.
- USDA loan: This loan is provided by the United States Department Of Agriculture for homebuyers in rural areas. This loan is only eligible if you buy a home in certain USDA-approved areas.
Refinancing
Refinancing is one of the options you can take to lower your interest rates. In a refinance, you take out a new loan to pay off the previous loan. In addition to lowering your mortgage rates so your monthly payment value decreases, you can also change the type of your mortgage.
You can also opt for a cash-out refinance if you want to use your home equity. Once you build up enough home value, cash-out refinancing can convert the equity into cash that you can use for other needs.
Rate And Fee Transparency
Being able to reliably see interest rate and lender fee information is an integral part of the mortgage lending experience. If you can easily access your rate and fee estimates, you can compare offers from various lenders easier and make it easier to find which loan provides the best value.
Online Mortgage Services
We also take a closer look at the mortgage lender’s suite of online services. In this criterion, we examine their online application process as well as any other supplementary tools they may have.
Physical Availability And Support Service
The availability of a lender’s services is an essential consideration. Even if a lender offers the best rates and the lowest fees, it won’t mean anything if they can’t issue a loan in your area. That’s why we need to take a look at the lender’s service availability – as well as their physical office availability, in case you prefer face-to-face interaction with a loan officer.
Customer Experience
Customer service and complaint handling is another essential part of the mortgage lending experience. To help determine a lender’s level of customer satisfaction, we review reports and studies from three customer rating organizations: The Better Business Bureau, J.D. Power, and the Consumer Financial Protection Bureau.
Rocket Mortgage - Quicken Loans Review
Rocket Mortgage (NMLS ID# 3030) is the online mortgage arm offered by Quicken Loans. Founded in 2015, Rocket Mortgage boasts the ability to pull borrower data from external sources, making the online application process much easier for their applicants.
Combined, Rocket Mortgage & Quicken Loans top the nation’s mortgage lenders list in terms of home loan volume. Not only by volume, Quicken Loans & Rocket Mortgage are also the second-largest mortgage lender for FHA and VA mortgages.
Rocket Mortgage Loan Product Availability
Rocket Mortgage offers an identical suite of mortgage loan products to their parent company Quicken Loans. The loan products that they provide include:
- Conventional fixed mortgages with customizable terms
- Conventional 5/1, 7/1, 10/1 ARMs
- Government mortgages: VA and FHA loans
- Jumbo mortgages up to $3 million
- Mortgage refinancing – rate and term & cash-out
Rocket Mortgage rates are comparable to their closest rivals. Referring to average rates and costs for 30-year fixed mortgages in 2019, Rocket’s rate is slightly lower at 4.16% compared to Chase (NMLS ID# 399798) and Wells Fargo (NMLS ID# 399801) at 4.22%.
However, their closing costs are somewhat higher compared to their peers. On a 30-year fixed-rate loan in 2019, Rocket Mortgage loans charge borrowers $2,805 at closing, compared to Wells Fargo’s $1,199 closing cost.
Different from most lenders that offer fixed-rate mortgages in 10-year, 15-year, 20-year, and 30-year terms, Rocket Mortgage by Quicken Loans offers their borrowers the option to customize their mortgage loan lengths. With the YOURGage loan program, a borrower can choose any number of years between 8 to 30 for their fixed-rate loan.
In addition to regular refinance mortgage options, Rocket Mortgage also offers two government-backed refinance programs. FHA borrowers can opt for an FHA Streamline loan, designed to help borrowers of FHA loans take advantage of lower mortgage rates. If you have a VA loan, you can choose the VA IRRRL refinance, allowing you to lower your mortgage rates with a low lender fee.
Rocket Mortgage by Quicken Loans, however, has several notable exceptions from its loan lineup. Rocket doesn’t offer USDA loans – which limits your down payment options.
Rocket also does not offer any home equity loan products – including home equity loans and home equity lines of credit. Your only option to leverage your home value with Rocket is by using a cash-out refinance.
Rate And Fee Transparency
Looking for interest rate information with Rocket Mortgage by Quicken Loans is very easy. Rocket’s website shows daily-updated purchase rates on their major loan types – conventional 15-year fixed-rate and 30-year fixed-rate mortgage, 30-year VA loan, and 30-year FHA loan.
The legal disclosure section also breaks down detailed information on the financial and credit score assumptions used to create the listed rate and APR estimates. However, while you can see your rates and APR, you can’t get detailed information on your closing costs and lender fees.
In addition to the rate and APR information on your mortgage, Rocket also provides several tools to help borrowers find out how much their loan will cost. To complement the mortgage calculator, they also provide an affordability calculator and a refinance estimate tool.
If you need customized rates tailored to your financial situation, you can create a Rocket Mortgage by Quicken Loans account and put in a request for it. However, asking for a personalized rate estimate may need a hard credit inquiry – which may impact your credit scores negatively.
Online Mortgage Services
True to its positioning as a fully-digital lender, Rocket Mortgage by Quicken Loans provides a robust online mortgage application process that usually takes about half an hour. When you apply for a loan with Rocket as a home buyer, you’ll be guided through the mortgage process step-by-step. Due to Rocket’s ability to pull financial information from various institutions, some of the important information will be filled automatically for you.
If at any point you’re wondering what to do, you can pull up FAQ answers by clicking on question mark icons placed throughout the mortgage process. You can also ask to contact their home loan experts during the application process.
Physical Availability And Support Service
Rocket Mortgage & Quicken Loans is licensed to originate mortgages in all fifty states. Because Rocket Mortgage conducts their entire business online, they operate no physical branches. However, Rocket Mortgage does offer customer service by phone if you have any problems during your loan application.
Customer Experience
One of Rocket Mortgage’s greatest strengths is its priority on customer satisfaction. It was named the best in J.D. Power’s mortgage satisfaction study for 11 consecutive years, finishing 2020 with 883 points out of 1,000.
The CFPB also concurs with the stellar J.D. Power score, recording just 187 complaints out of 774,900 loans issued in 2019. Their Better Business Bureau score is no different, with Rocket Mortgage by Quicken Loans receiving an A+ rating.
Strengths Of Rocket Mortgage
Rocket Mortgage by Quicken Loans is a favorite among borrowers because of its convenience. In addition to that, here are three other things that Rocket Mortgage excels at.
Customizable Loan Options
Most of the time, fixed-rate loans have a set number of years offered by lenders ranging from 10 to 30 years. You have the leeway to choose whichever loan term fits your needs and financial condition. Rocket takes this one step further with their YOURGage program.
If you choose to take out a YOURGage loan, you can choose any number of years between 8 to 29. With identical qualification requirements to a normal fixed-rate loan, you can further customize the loan term to last as long as you need.
Varied Refinancing Options
Another benefit of lending with Rocket is that you have many options for refinancing. Complementing the conventional rate-and-term and cash-out refinancing that most lenders offer, they also offer FHA Streamline and VA IRRRL refinances.
FHA Streamline and VA IRRRL are special types of refinancing that are available to FHA and VA borrowers, respectively. These refinance alternatives offer easier processing and lower fees for borrowers.
Rate Lock Feature
Another perk that Rocket Mortgage offers its borrowers is the RateShield. On certain mortgages, you’ll be pre-approved as soon as your information has been verified and your rates will be locked for up to 90 days.
RateShield doesn’t just lock your rate where it was when you apply for a mortgage, it also allows your rates to float down if market rates fall. Conversely, if rates rise, yours will still stay the same.
Weaknesses Of Rocket Mortgage
However, there are also some caveats to borrowing with Rocket Mortgage, which we detail here.
Absence Of Major Loan Options
While Rocket has a deep lineup of mortgages for borrowers to take advantage of, there are some notable omissions. They do not offer USDA mortgages, and they also do not have any home equity loans – leaving you with only cash-out refinancing to leverage your home value. If you’re looking for government mortgages with Rocket, your only options are FHA and VA loans.
No Physical Presence
Rocket’s fully-online business model brings convenience to its borrowers, but there’s a trade-off. If you’re a more traditional borrower who prefers talking to a loan officer in person, you can’t get it with Rocket.
The Bottom Line
With its fully-online mortgage lending business, a shining record of customer satisfaction, and customizable loan products for its borrowers, Rocket is the nation’s largest lender for a reason. While this online convenience is provided for lenders of any demographic, it may not be the best option for more traditional borrowers who prefer going to a branch office.
Still looking for the perfect mortgage lender? Wesley Mortgage, LLC can help you! We’ve compiled mortgage lender reviews from America’s top banks to help you decide which one is the best for you. We also provide a mortgage consultation with our financial professionals for personalized advice. Contact us today for more information!